Moody's Downgrades China's Credit Outlook to Negative Amid Economic Concerns

China faces a significant financial time bomb risk due to its banking system’s exposure to a substantial amount of hidden debt, accumulated by cities and provinces through years of unchecked borrowing. Estimates by the International Monetary Fund and Wall Street banks place this off-balance-sheet government debt between $7 trillion and $11 trillion. This debt largely comprises corporate bonds issued by local-government financing vehicles for infrastructure projects and other expenditures.

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